Does the Checkers franchise agreement specify that the Area Franchisee acknowledges and agrees that the proximate cause of such damages sustained by Franchisor is Area Franchisee's act of default and not Franchisor's exercise of its right to terminate?

According to Checkers's 2025 Franchise Disclosure Document, the Area Franchisee acknowledges and agrees that if Checkers exercises its right to terminate the agreement due to the Area Franchisee's default, the Area Franchisee is responsible for damages. Specifically, the Area Franchisee agrees that the proximate cause of damages sustained by Checkers is the Area Franchisee's act of default, not Checkers's decision to terminate the agreement.

This means that if Checkers terminates the franchise agreement because the Area Franchisee failed to meet their obligations, the Area Franchisee is liable for all actual, consequential, special, and incidental damages that Checkers incurs due to the early termination. This holds true regardless of whether these damages were reasonably foreseeable.

This clause is significant for prospective Area Franchisees as it emphasizes the financial responsibility they bear if they fail to comply with the franchise agreement, leading to termination. It is a standard practice in franchising to hold franchisees accountable for damages resulting from their default, but the scope and types of damages can vary. Area Franchisees should carefully evaluate their ability to meet the obligations outlined in the franchise agreement to avoid potential financial liabilities associated with early termination.